US chipmaker Qualcomm has agreed to raise its bid for NXP Semiconductors to $44 billion, as it looks to seal a longstanding deal to buy the Dutch company while also defending itself from a hostile takeover bid from Broadcom.
Qualcomm has increased its offer to $127.5 per share, a bump of 16 per cent from the initial $110 arrangement agreed between the two companies in October 2016, which faced resistance from NXP shareholders including a unit of US hedge fund Elliott.
Qualcomm said in a statement on Tuesday that it had entered into a binding agreement with nine NXP shareholders, including Elliott, who collectively hold more than 28 per cent of the group’s shares and who have agreed to tender their shares at the new price. The company also reduced the acceptance threshold for its bid to just 70 per cent of NXP’s investor base.
The move to boost the NXP offer also aims to derail Broadcom’s hostile $146 billion takeover attempt of Qualcomm, which is trying to overthrow the board of the San Diego-based company.
The Singapore-based company’s pursuit has been complicated by Qualcomm’s existing NXP takeover plans. Broadcom has stated that it would not follow through on a deal for NXP if it was successful in securing a deal to buy Qualcomm at a price of more than $110 per share.
Qualcomm has pursued NXP as part of a bid to diversify its business, which is dependent on smartphones, while its target is heavily focused on the automotive sector. Qualcomm said it had agreed to finance the increased bid with cash on hand and new debt.
Qualcomm’s new agreement with NXP comes as influential proxy adviser Institutional Shareholder Services said that the San Diego-based company should negotiate a deal with Broadcom and has called into question the company’s current business model.
After refusing to engage with Broadcom over its offers, Qualcomm’s chairman met with Broadcom chief executive Hock Tan last week. However, the meeting ended with Qualcomm continuing to reject Broadcom’s offer, citing fears that a deal would be blocked by antitrust regulators. Broadcom has offered Qualcomm $8 billion, one of the largest break-fees in dealmaking history, if it is agreed and then blocked by competition authorities.
– Copyrignt The Financial Times Ltd